EU, Russia to pursue electricity grid link

MOSCOW, Oct 16, 2003 (Reuters)

Russian and European Union power deregulation could
pave the way for the two to link their electricity
grids by 2007, creating a vast power market from Spain
to Siberia, the Russian government's energy chief
said on Thursday.

Russia plans to rescind price controls on electricity
sometime after mid-2006, while the European Union
is to open its power markets in 2007.

"The time frames match," Viktor Khristenko told
reporters during a round table on electricity with
a senior EU energy official. "It seems fully possible
that we can get to work on synchronisation by 2007."

"There is a liberalised electricity market in
the European Union and a programme is being realised
in Russia to build that kind of market," Khristenko
said. "They are built on a single base."

The head of the European Commission's energy directorate
general, Francois Lamoureux, proposed Russia and
the European Union lay out together each side's
obligations and deadlines to link up the grids.

He said the two sides must work out common operating
rules and environmental standards.

Russia and the European Union are deadlocked over
an EU demand that Russia sell state produced gas
to domestic customers at world prices before the
European Union will back Russia's bid to join the
World Trade Organisation.

Lamoureux said Russia's regulated power prices
-- as low as half of some European countries' wholesale
rates, largely due to cheap gas -- were not a matter
of dispute.

Russia and the European Union are expected to
agree on a feasibility study in Brussels next month.
Russia's power monopoly, Unified Energy System ,
and European industry body Eurelectric are already
working on a joint study on grid synchronisation.

UES, which can only export power to Finland because
its grids are cut off from the rest of Europe, has
been pushing for European agreement to re-connect,
allowing for two way power flows.

UES has seized on blackouts in northern Europe
and Italy to tout grid synchronisation, saying it
would provide backup grid and generation capacity
for both Russia and Western Europe in case of accidents.